Offices NW: Michael Hawkins, Colliers International

North West Offices – the state of the marketMichael Hawkins, National Offices, Colliers International

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What we’re going to cover

1. Introduction

2. National Markets Sentiment

3. NW Regional Overview- Regional Revolution- H1 Transactional Activity- Who’s selling? / Who’s investing?- Schemes to watch

4. Spotlight on Manchester

5. Close

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The National Picture

Commercial property investment volumes UK-wide set to reach £60bn before year end – 15% up on 2013

The proportion of investment in London shrinks as investment in the regions grow

Investment volumes outside of London (YTD) have already surpassed the full year total for 2013

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NW Regional Opportunity

2015: The Year of the Regional Revolution

Devolution of powers from Westminster will impact greatly on the NW region as a key driver of

the ‘Northern Powerhouse’ economy.

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North West H1 Transactional Activity

Transactional activity up on H2 2013

800,000 sq ft of space let or sold in H1 2014

Vacancy rates just under 18.6% in H1 2014 (MCR at 14.4% and Liverpool at 17.6%)

H1 2008

H2 2008

H1 2009

H2 2009

H1 2010

H2 2010

H1 2011

H2 2011

H1 2012

H2 2012

H1 2013

H2 2013

H1 2014

10.0%

12.5%

15.0%

17.5%

20.0%

22.5%

25.0%North West Manchester Liverpool

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Manchester City Centre – Our Playground

• 19 Million sq ft of existing Offices

• £70 Billion Capital Value

• £266 Million annual rent

• 8 Million sq ft of Offices to come

• £35 Billion Capital Value

• £220 Million annual rent

• Investment fees of £350 million

• Leasing fees of £16.5 million

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Manchester Snapshot

SUPPLY Total office stock 19.00m sq ft

Vacancy 2.7m sq ft (14.2%)

“Genuine” vacancy 1.2m sq ft (6.3%)

Total Grade A office stock – 4.5m sq ft

New build prime CBD vacancy – 335k sq ft (8%)

TAKE UP H1 total take up of 801,513 sq ft (same level as 2013

as a whole)

10 year average is 880,000 sq ft

2010 a record year 1,325,000 sq ft

Take up analysis of 2011 (700,000 sq ft) 2012 (790,000 sq ft) and 2013 (880,000 sq ft)

Significant deals for Q2 include: Ford Credit at First Street; Slater & Gordon at 58 Mosley Street; Towergate Insurance at 3 Hardman St; Economic Solutions at Churchgate & Leigh House

DEMAND 2.0m sq ft of 30k sq ft + lease expiries 2014 – 2017

Key current requirements: Addleshaws, Bupa, DLA Piper, Ernst & Young, Gazprom, Shoosmiths, Squire Patton Boggs and Weightmans

Typical Headline Rents Rent

Prime CBD new build £30.00 - £32.00 per sq ft

Fringe new build £25.00 per sq ft

Prime CBD refurbished £20.00 - £25.00 per sq ft

Fringe refurbished £15.00 - £19.50 per sq ft

Term Certain Grade ANew Build

Grade A Refurbished

5 years Not available 15 - 18 months rent free

10 years 24 – 30 months rent free

30 – 36 months rent free

TYPICAL INCENTIVES:

TYPICAL HEADLINE RENTS:

Yield %

Prime 4.5% - 5.75%

Secondary 6.5% - 8.0%

TYPICAL YIELDS:

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Manchester Snapshot

Schroders’ acquisition of City Tower – May 2014

NW Developer / Landowners – Key Players

Historic Key Players - Developers

Future Key Players – Next 5 Years - Developers

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NW Investment – Key Players

New Investors

Traditional Investors

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Key Schemes - Indicative

Noma- 4 million sq ft - Mixed-use scheme

St Peter’s Square- New business district- Landmark / London

Scottish / 3 St Peters / Peter House

ITV Granada site- 13-acre - Residential-led

mixed-use development

Embankment- First phase 101

Embankment - 167,000 sq ft Grade

A office development

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Schemes to watch - Manchester

Landmark- 178,000 sq ft- Hines/Manchester

3 St Peter’s Square- 110,000 sq ft- CIS c/o AXA Real

Estate

Cotton Building- 340,000 sq ft /

240,000 sq ft- Allied London

Astley & Byrom House- 250,000 sq ft- CBREGI

11 York Street- 85,000 sq ft- Aberdeen & Rank Xerox

Pension Fund

Brazennose House- 150,000 sq ft- M&G

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Looking Ahead

What does the future look like for the NW Region?

Investment volumes will cruise towards a full year total of £60bn (15% up on 2013’s £52bn)

Devolution of power to the regions

North West-based – National Influence

90%10% 90%10%

Michael Hawkins Director

Head of NW Offices

Nick NelsonAssociate Director

NW Offices

Peter GallagherDirector

NW Offices

Scott ShufflebottomGraduate

NW Offices

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